CPRI Posts Q2 Loss, Y/Y Declines in Michael Kors & Jimmy Choo Revenues

Core Insights - Capri Holdings Limited (CPRI) reported a decline in top-line revenue year over year but exceeded the Zacks Consensus Estimate, while the bottom line decreased and missed consensus estimates [1][10] - The company is focused on growth through its core brands and aims to enhance profitability and reduce debt following the expected closure of the Versace sale-off [2][3] Financial Performance - CPRI posted an adjusted quarterly loss of $0.03 per share, missing the Zacks Consensus Estimate of $0.14, and down from adjusted earnings of $0.64 per share in the prior year [4][10] - Total revenues were $856 million, a decrease of 2.5% year over year, but above the Zacks Consensus Estimate of $830 million; on a constant-currency basis, revenues fell by 4.2% [5][10] - Gross profit decreased by 4.6% year over year to $522 million, with a gross margin decline of 130 basis points to 61% [5][6] Segment Performance - Michael Kors revenues declined by 1.8% year over year to $725 million, surpassing the Zacks Consensus Estimate of $697.2 million; gross profit fell to $430 million, with a gross margin contraction of 180 basis points to 59.3% [7] - Jimmy Choo's revenues were $131 million, down 6.4% year over year, missing the Zacks Consensus Estimate of $132.8 million; gross profit slightly decreased to $92 million, but gross margin expanded to 70.2% [8] Strategic Initiatives - The company plans to utilize proceeds from the Versace sale-off to improve financial flexibility and support a newly authorized $1 billion share repurchase program expected to begin in fiscal 2027 [3][12] - Capri Holdings anticipates improving retail trends in the second half of fiscal 2026, positioning itself for a return to growth in fiscal 2027 [3] Future Outlook - For the third quarter of fiscal 2026, Capri Holdings expects total revenues between $975 million and $1 billion, with an operating margin of 7-8% and earnings per share between $0.70 and $0.80 [15] - For fiscal 2026, total revenues are projected to be between $3.375 billion and $3.45 billion, with an expected operating income of $100 million and earnings per share of $1.20 to $1.40 [17][18]